What are the positive and negative impacts of GST?

GST will act as a major boost to economic efficiency, tax compliance and domestic and foreign investment.

INTRODUCTION:

GST is a destination based tax, levied on the consumption of goods and services. GST stands for Goods and Services Tax levied by the Government in a move to replace all of the indirect taxes.

The main idea behind introducing GST is to improve the economy of the nation. A single undivided Indian market would strengthen the economy and make a nation, powerful as well.

IMPORTANT MEASURES:

There is a lot that is predicted by economic pundits, and there is a lot of dust in the air with regards to the immediate and long-term impact of the GST bill. It's only when the dust settles, one will see where we stand.

However, it can be said with surety that there will be a significant amount of transparency and ease in the taxation process for the tax payer.

There are approx. 140 nations where GST has as of now been actualized. A list of the prominent nations is Australia, Canada, Germany, Japan, and Pakistan, to give some examples. Usage of GST impacts a country both ways, positively and adversely.

Positive Impacts of GST in India:

1. GST will also help to build a transparent and corruption free tax administration.
2. Presently, a tax is levied on when a finished product moves out from a factory, which is paid by the manufacturer, and it is again levied at the retail outlet when sold.
3. It reduces the cost of doing business, as it eliminates all the hidden charges. It will reduce the cost of things; as a result consumption might increase, helping companies increase their production.
4. Currently, the split between taxes for manufacturing and service charge is very complicated. With the application of GST all the taxes will be integrated and perhaps it will become possible to split the manufacturing and services tax burden equally.
5. GST is applied at the final point of consumption and not at every step (like the manufacturing and retail outlets) this will help in eliminating misrepresentations and assist in the development of the common national market.

The tax administration will work corruption free and with transparency.

Negative Impacts of GST in India:

1. Consumers are not very hopeful about GST benefits and implementation and therefore, they are reluctant to adapt to the new system.
2. Some Economists say that GST in India would impact negatively on the real estate market. It would add up to 8 per cent to the cost of new homes and reduce demand by about 12 per cent.
• Real Estate could have a negative impact, some economist predict that it will add up to 8% to the cost of new homes and reduce demand closely by 12%
• There might be unrest amongst dealers who have been avoiding certain taxes, by only paying VAT, who will now be forced to pay GST.
3. Some Experts says that CGST (Central GST), SGST (State GST) are nothing but new names for Central Excise/Service Tax, VAT and CST. Hence, there is no major reduction in the number of tax layers.
4. Some retail products currently have only four per cent tax on them. After GST, garments and clothes could become more expensive.

CONCLUSION:

Speaking of expenses, the GST has also considerably increased expenses for accounting firms and small businesses alike in terms of employees. Some small businesses filed their own taxes, and that has become problematic since a lot of people are still not well conversant with the GST, and accounting firms have to employ new people who have been coached in the GST.

Apart from that, the implementation of the new GST-complaint software also translates to additional expenses involved in the training of the existing employees.

All sections of economy viz., big, medium, small scale units, intermediaries, importers, exporters, traders, professionals and consumers shall be directly affected by GST...

One of the biggest taxation reforms in India -- the Goods and Service Tax (GST) -- is all set to integrate State economies and boost overall growth. GST will create a single, unified Indian market to make the economy stronger.

Experts say that GST is likely to improve tax collections and Boost India's economic development by breaking tax barriers between States and integrating India through a uniform tax rate.

Under GST, the taxation burden will be divided equitably between manufacturing and services, through a lower tax rate by increasing the tax base and minimizing exemptions.

GST is levied on all supply of goods and provision of services as well combination thereof. All sectors of economy whether the industry, business including Govt. departments and service sector shall have to bear impact of GST.

- Laxmi Prasad